Liberal group outlines substantial Medicare cuts

WASHINGTON (AP) — Trying to prevent a raid on health care programs in upcoming budget talks, a think tank close to the White House today released a plan for significant savings, mostly from Medicare.

Medicaid and the new health care law are largely spared from cuts in the blueprint from the liberal-leaning Center for American Progress. Instead, it targets Medicare service providers, from the pharmaceutical industry to hospitals and nursing homes. Higher-income Medicare recipients also would face increased monthly premiums for outpatient and prescription coverage.

After taxes, health care costs are probably the thorniest issue facing policymakers looking for a way to avoid the so-called fiscal cliff.

Rising health care costs are the most stubborn element of the nation’s long-term budget woes. At the same time, a recent report for the government estimated that the U.S. health care system squanders $750 billion a year, about 30 cents of every medical dollar.

The center’s proposal is notable because the organization serves as a kind of idea factory for President Barack Obama’s administration, akin to the conservative Heritage Foundation during Ronald Reagan’s presidency. The plan calls on Obama to draw the line against broader cuts and premium increases in budget talks with Republicans.

“This isn’t a floor. This is a ceiling,” said Neera Tanden, president of the center and formerly a senior White House official who worked on Obama’s health care overhaul. “The idea was to provide ideas in the debate that would not punish the middle class and low-income seniors.”

The center’s plan rejects raising the Medicare eligibility age to 67, a concession that Obama quietly offered during failed budget negotiations last year. Instead it focuses on squeezing Medicare service providers, a strategy the plan’s authors say will make the entire health care system more efficient without risking quality.

Drugmakers would take the biggest hit, accounting for $160 billion, or about 40 percent of the proposed 10-year savings.

Hospitals account for an additional $61 billion in cuts, or 16 percent of the total. Medical device manufacturers and insurance companies would each be on the hook for about $20 billion. Nursing homes are targeted for $16 billion in cuts.